Stocks Slump on New Attack Fears

Stocks slumped Monday as jitters about possible new terrorist attacks on the United States and a drop in a key gauge of economic activity sent investors scampering out of a market that last week racked up its biggest gain of the year.

Stocks started off on a bad note after Vice President Dick Cheney said Sunday that an attack on the nation was “almost certain� amid signs that the Al Qaeda network may be planning another strike.

“Clearly, Cheney’s comments are scaring investors, especially coming off of an 8% up week for Nasdaq,� said Seth Tobias, a trader and fund manager at Circle T Partners.

A bigger-than-expected decline in the U.S. index of leading economic indicators added to worries by hinting at a tepid economic recovery.

The Dow Jones industrial average slid 123.58 points, or 1.2%, to 10,229.50. The broader Standard & Poor’s 500 index was down 14.71 points, or 1.3%, at 1,091.88. The technology-laden Nasdaq composite index was down 39.80 points, or 2.3%, at 1,701.59.

Losers exceeded winners by a ratio of 5 to 3 on the New York Stock Exchange and almost 2 to 1 on Nasdaq in light trading.

The Dow climbed 4.2% last week, giving the blue-chip gauge its best week since September. Nasdaq surged 8.8%, its biggest weekly gain in 13 months.

The rally left investors primed to take profits when the Conference Board reported that leading indicators fell 0.4% in April after inching up 0.1% in March.

“The biggest concern is the economy,� said Marc Klee, co- manager of the John Hancock Technology Fund.

But in the short term, Wall Street cited fears of another terror attack as a reason to sell. A new attack on the United States is almost certain as U.S. intelligence officials picked up signals that a fresh Al Qaeda strike could be in the works, Cheney said.

The FBI also warned of a possible plot by the Al Qaeda network to detonate bombs in U.S. apartment buildings. Investors are worried that more assaults could hurt consumer sentiment and the economy and spark a sharp sell-off such as the one after the Sept. 11 attacks.

“When people are told the likelihood of another terrorist attack is higher, it makes them nervous,� Klee said.

The market’s losses were spread across a wide array of sectors. Among tech companies, Broadcom declined $1.03 to $26.27, and Dell Computer stumbled 72 cents to $27.23. Among blue chips, American Express fell 89 cents to $43.30, 3M fell $1.83 to $128.24, and GE lost 85 cents to $32.60.

Gainers included retailer Lowe’s, climbing $2.04 to $46.80 on first-quarter earnings that surpassed analysts’ expectations by 8 cents a share.

Gold stocks benefited from worries about the prospect of more attacks, as investors jumping into so-called safe havens pushed gold up $5.10 to $315.70 an ounce.

The Amex index of gold mining stocks jumped more than 10% to a high unseen since October 1997.

Bond yields slipped on the weak economic news. The yield on the benchmark 10-year Treasury note dipped to 5.20% from 5.25% on Friday. The dollar continued its recent slide against the euro and the yen.

Oil inched up 15 cents to $28.33 a barrel in New York, even though Norway said it would end oil production limits June 30. Russia announced similar plans Friday. Tighter crude supplies have helped boost prices 41% this year.

In other market news:

* Utilities were the day’s best-performing sector as Duke Energy advanced 83 cents to $34.35 and energy trader Dynegy gained $1.58, or 23%, to $8.60.

* PeopleSoft fell $1.85 to $21.84 after saying it still sees no discernible pickup in customer spending. After the market closed, regulators charged Ernst & Young with compromising the independence of its audits of PeopleSoft by entering a business venture with the software company. PeopleSoft fell to $21.16 in after-hours trading.

Other software stocks also fell, among them business software maker Oracle, which lost 45 cents to $9.11, and Microsoft, which slumped $2.02 to $54.01.

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Market Roundup, C9-10